CFPB Tries to Nip New Wave of Unlawful Medical Debt Collection and Credit Reporting in the Bud

In November 2016, media outlets across the U.S., including the New York Times, the Wall Street Journal, and the Washington Post, were abuzz with the findings from a new study by Yale University researchers published in the New England Journal of Medicine. According to the study, when a person with health insurance goes to the emergency room in a hospital covered by their insurance, 22 percent of the time they will receive bills for treatment by an out-of-network doctor.

(The study, based on data from an unnamed insurance company, blamed the issue on private equity-owned hospital staffing companies. Only in August 2021 was it revealed that UnitedHealth was the source of the data. But the motives for the study are a story for a different day.)

The uproar over these “balance billing” or “surprise billing” practices the study highlighted reached all the way to Capitol Hill. Though it took some time, sensing an easy bipartisan political victory, Congress passed the No Surprises Act into law in December 2020 as part of the Consolidated Appropriations Act of 2021 in an effort to end these billing practices.

The statute, which went into effect this past January 1, has two principal components: the “balance-billing” provision and the “good-faith estimate” provision.

Generally, the “balance-billing” provision mandates that patients who receive out-of-network services will only have to pay the amount they would have paid if the services were provided by an in-network provider. They need not pay the difference between the out-of-network rates and what is paid by their insurer. The “good-faith estimate” provision requires health care providers to provide good-faith estimates of items or services to patients who have no insurance (including no insurance for out-of-network services) or who are choosing to not bill their insurance for items or services that would otherwise be covered.

But where there are medical services provided, there will be medical bills. And where there are medical bills, there will be debt collectors to collect unpaid bills, as well as credit reporting agencies (“CRAs”) poised to publish information about unpaid medical debts on consumer reports. In an attempt to prevent questionable, if not unlawful, conduct by debt collectors and CRAs, the Consumer Financial Protection Bureau (“CFPB”) recently released a bulletin reminding them both of their legal obligations in light of the No Surprises Act.

The prevalence and perniciousness of medical expenses and medical debts

Before diving into the CFPB’s bulletin, it is important to note just how widespread medical expenses and debts are and the nature of their impact on Americans.

For starters, in May 2021, the Federal Reserve Board reported that nearly one in five adults (17%), had “major, unexpected medical expenses” in the last 12 months—which may or may not have been because of COVID-19—with the median amount falling between $1,000 and $1,999. Almost the same percentage (16%) had debt as a result of their own or a family member’s medical care.

Sadly, according to the report, almost one in four adults (24%) went without medical care because of an inability to pay. Of those who did, 17 percent skipped dental care, 13 percent skipped seeing a doctor or specialist, and eight percent skipped prescription medicine. Of people with family incomes of less than $50,000, 35 percent went without some medical care because they couldn’t afford it.

And just this past March, the CFPB itself issued a report that estimates that the medical bills on U.S. consumers’ credit reports total a whopping $88 billion. Among other concerning findings in the report, approximately 1 in 5 U.S. households report they have medical debt, 43 million credit reports contained one or more medical debt accounts that were in collections, and as of the second quarter of 2021, 58% of the bills that are in collections and on Americans’ credit reports are medical bills.

Medical expenses and debt are particularly pernicious because they often result from a sudden and unexpected event, like someone being diagnosed with a serious illness or an injury-causing event happening in a blink of an eye. Many of the families of the over 79.4 million Americans who contracted COVID-19 and the over 964,000 Americans who died from it (as of the time this article was published) saw how quickly medical expenses and debt can spring up seemingly out of the blue.

There are structural issues with medical expenses and debt that increase their negative impact. Not only are consumers rarely informed of the costs of medical treatment in advance, it is almost impossible to “shop around.” And, medical bills often have errors that require consumers to navigate corporate or governmental bureaucracies to resolve—if they’re lucky.

The CFPB warns debt collectors and CRAs about medical debts prohibited by the No Surprises Act

The CFPB issued its bulletin regarding the No Surprises Act for two reasons.

First, it sought to “emphasize the obligation of debt collectors to comply with the Fair Debt Collection Practices Act’s (“FDCPA”) prohibitions on false, deceptive, or misleading representations or means in connection with the collection of any debt and unfair or unconscionable means to collect or attempt to collect any debt” covered by the No Surprises Act.

Second, the CFPB sought to emphasize the “obligation of [CRAs] and information furnishers to comply with the Fair Credit Reporting Act’s (“FCRA”) accuracy and dispute resolution requirements, including when collecting, furnishing information about, and reporting medical debts covered by the No Surprises Act.”

Debt collectors and the No Surprises Act

The FDCPA and its implementing Regulation F prohibit the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt,” including, for example, any false representation of “the character, amount, or legal status of any debt.”

In its bulletin, the CFPB noted that the FDCPA’s prohibition on misrepresentations covers misrepresenting to a consumer that they must pay a debt stemming from a charge from a medical provider that exceeds the amount permitted by the No Surprises Act.

For example, a debt collector who falsely claims to a consumer that they owe a debt arising from out-of-network charges for emergency services could violate the FDCPA’s prohibition on misrepresentations if those charges exceed the amount permitted by the No Surprises Act. The CFPB also observed that courts have held that debt collectors attempting to collect debt amounts exceeding what are owed would violate the prohibition on unfair or unconscionable debt collection practices.

CRAs, information furnishers, and the No Surprises Act

Of course, many debt collectors provide information about unpaid medical debts to CRAs. Debt collectors, as furnishers of information to CRAs, and CRAs themselves, are subject to the FCRA and its implementing Regulation V.

The FCRA and Regulation V impose several obligations on CRAs and furnishers concerning the accuracy of information in consumer reports. Perhaps the most significant is that when preparing a consumer report, a CRA “shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” Equally significant from a furnisher’s perspective is the requirement that furnishers “establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to a [CRA].”

In addition, the FCRA and Regulation V require CRAs and furnishers alike to conduct reasonable and timely investigations of consumer disputes to verify the accuracy of furnished information.

In its bulletin, the CFPB stated that a debt collector that furnishes information claiming a consumer owes a debt arising from out-of-network charges for emergency services in an amount that exceeds the amount allowed by the No Surprises Act may violate the FCRA and Regulation V. So too would a CRA that included this information in a consumer report it prepared. Both the furnisher and the CRA would violate the FCRA and Regulation V if they failed to meet their dispute obligations regarding this reported debt.

The CFPB promises a close look at medical debt in the wake of the No Surprises Act

The CFPB concluded its bulletin by declaring that it will “closely review the practices of those engaged in the collection or reporting of medical debt.” It also promised to hold debt collectors accountable for failing to comply with the FDCPA and Regulation F, and to hold CRAs and furnishers accountable for failing to comply with the FCRA and Regulation V. It further claimed it will use “all appropriate tools to assess whether supervisory, enforcement, or other action may be necessary.”

With the No Surprises Act having gone into effect on January 1, 2022, consumers may never again have to deal with “balance billing”/“surprise billing” and the stress of large, unforeseen medical expenses that may turn into debts. With its recent bulletin, the CFPB apparently plans to vigilantly protect consumers from debt collectors and CRAs that engage in unlawful conduct under the FDCPA and/or FCRA in connection with medical expenses and corresponding debts prohibited by the No Surprises Act.

John Soumilas is a partner at Center City-based Francis Mailman Soumilas, P.C., a leading consumer rights law firm. He can be reached at

Reprinted with permission from the April 4, 2022 edition of The Legal Intelligencer © 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or